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DECREE No. 187/2004/ND-CP of NOVEMBER 16, 2004 ON TRANSFORMATION OF STATE-OWNED COMPANIES INTO JOINT-STOCK COMPANIES

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 12, 1999 Enterprise Law;

Pursuant to the November 26, 2003 State Enterprise Law;

At the proposal of the Finance Minister,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1. Objectives, requirements of the transformation of State-owned companies into joint-stock companies (hereinafter referred to as equitization for short)

1. To transform State-owned companies where the State does not need to hold 100% of their capital into the form of enterprises with multiple owners; mobilize capital of individuals, economic organizations and social organizations at home and abroad to raise the financial capability, renovate technology and renew the managerial mode with a view to increasing the efficiency and competitiveness of the economy.

2. To harmonize the interests of the State, enterprises, investors and laborers of enterprises.

3. To practice publicity and transparency according to the market principle; to put an end to the closed, internal equitization of enterprises; to closely associate equitization with the capital market and the securities market.

Article 2. Subjects to be equitized and conditions for equitization

1. This Decree applies to the to be-equitized State-owned companies where the State does not need to hold 100% of their charter capital, including State corporations (including State-owned commercial banks and financial institutions); State-owned independent companies; corporations' independent cost-accounting member companies which are invested and established under the State's decisions; dependent cost-accounting units of State-owned companies (hereinafter referred to as equitized enterprises for short).

The list of State-owned companies where the State holds 100% of their charter capital shall be decided by the Prime Minister in each period.

2. The State-owned companies prescribed in Clause 1 of this Article shall be equitized when they are still left with State capital (excluding the land use right value) after subtracting the value of assets no longer used, assets awaiting liquidation; business losses, losses due to asset price decreases, irrecoverable debts and equitization expenses.

3. The equitization of dependent cost-accounting units of State-owned companies, which fall into the subjects defined in Clause 1 of this Article, shall be conducted only when:

a) The dependent cost-accounting units of the enterprises have adequate conditions for practicing independent cost-accounting;

b) It will not cause difficulties to, or badly affect the efficiency of, production and business activities of the enterprises or of other remaining sections of the enterprises.

Article 3. Forms of equitization of State-owned companies

1. Keeping unchanged the existing State capital amount at the enterprises, issuing shares to attract more capital in cases where the equitized enterprises wish to increase their charter capital. The level of mobilized capital shall depend on the capital sizes and demands of the joint-stock companies. The charter capital structure of joint-stock companies shall be described in the equitization plans.

2. Selling part of the existing State capital amount at the enterprises only or in combination with issuing shares to attract more capital.

3. Selling the whole of the existing State capital amount at the enterprises only or in combination with issuing shares to attract more capital.

Article 4. Share purchasers and conditions for purchasing shares

1. Domestic economic organizations and social organizations operating under Vietnamese laws and Vietnamese residents (hereinafter referred to as domestic investors) may purchase shares of equitized enterprises in unlimited quantity.

2. Foreign-invested enterprises, foreigners lawfully working in Vietnam, overseas Vietnamese (hereinafter referred to as foreign investors) may purchase shares of equitized enterprises according to Vietnamese law provisions.

Foreign investors wishing to purchase shares of equitized enterprises must open accounts at payment service-providing organizations currently operating on the Vietnamese territory in accordance with Vietnamese laws. All activities of buying, selling shares; receiving and using dividends and other revenues from the investment in share purchase must be conducted via these accounts.

Article 5. Domestic and foreign investors shall purchase shares of equitized enterprises in Vietnam dong.

Article 6. Equitization expenses

Equitization expenses shall be subtracted from the State capital at the equitized enterprises. The contents and levels of equitization expenses shall comply with the guidance of the Finance Ministry.

Article 7. Shares, share certificates and founding shareholders

1. The charter capital is divided into equal portions called shares. The par value of a share is uniformly set to be VND 10,000.

2. Share certificates are certificates issued by the joint-stock companies certifying the ownership over one or a number of shares of shareholders contributing capital to the companies. Share certificates may be registered or bearer ones which must contain the full principal contents specified in Article 59 of the Enterprise Law.

The Finance Ministry shall issue guidance on the share certificate form to be printed and managed by the enterprises.

3. Founding shareholders of equitized enterprises are shareholders fully satisfying the following conditions:

a) Participating in adopting the first charter of the joint-stock company;

b) Jointly holding at least 20% of the quantity of ordinary shares eligible for sale offer;

c) Owning a quantity of shares at least equal to the minimum level prescribed in the company charter.

The minimum quantity of shares of each founding shareholder and the number of founding shareholders shall be decided by the shareholders' general assemblies and prescribed in the company charters.

Article 8. Principles for the inheritance of the rights and obligations by joint-stock companies transformed from State-owned companies

1. Equitized enterprises shall have to arrange and employ to the maximum the number of laborers existing at the time of equitization decision and implement the regime for laborers according to current regulations.

Joint-stock companies shall have to inherit all obligations towards laborers transferred from the State-owned companies; may select, arrange and employ laborers and coordinate with the concerned agencies in settling the regime for laborers according to law provisions.

2. Joint-stock companies may take initiative in using all equitized assets and capital amounts for organizing production and business; inherit all pre-equitization interests, obligations and liabilities of the State-owned companies and have other rights and obligations as prescribed by law.

Chapter II

FINANCIAL HANDLING DURING EQUITIZATION

Article 9. Responsibilities of equitized enterprises for handling financial problems

Equitized enterprises shall have to coordinate with the concerned agencies in actively handling according to their powers and law provisions financial problems before determining their value and in the course of equitization. Where the handling meets with difficulties or falls beyond their competence, equitized enterprises must report such to competent bodies for consideration and settlement.

Article 10. Handling of assets which are leased, borrowed, accepted as capital contributed to joint-ventures and)or business cooperation, assets which are no longer used and assets invested with the reward and)or welfare funds

1. Assets which the enterprises have leased, borrowed, accepted as capital contributed to joint-ventures and)or business cooperation and other assets not belonging to the enterprises shall not be included in the value of the enterprises for equitization. Before their transformation into joint-stock companies, the enterprises must liquidate contracts or reach agreement with the asset owners so that the joint-stock companies can inherit the signed contracts or sign new contracts.

2. Assets which the enterprises no long need, are unsaleable or await liquidation shall be liquidated, sold or reported to competent bodies for transfer to other units according to current regulations. If the aforesaid assets have not yet been handled by the time of valuation of the enterprises, they shall not be included in the enterprises' value. These assets shall continue to be handled by the enterprises in the course of equitization; if they have not been handled by the time of making decision to announce the enterprise value, they shall be transferred to the Enterprise Debt and Outstanding Asset Purchase and Sale Company for handling according to law provisions.

3. For welfare facility assets, including nurseries, kindergartens, infirmaries and other welfare assets invested with the reward and)or welfare funds, they shall be assigned to the joint-stock companies for management and use in service of the collective laborers in the enterprises.

Particularly for dwelling houses of officials, employees and workers, including dwelling houses invested with State budget capital, they shall be assigned to the local housing and land agencies for management or sale to the current users according to current regulations.

4. For assets invested with the enterprises' reward and)or welfare funds and continuing to be used by the joint-stock companies in production and business, they shall be included in the equitized enterprises' value and converted into shares to be divided to the enterprises' laborers at the time of equitization in proportion to each laborer's actual working period at the enterprises.

Article 11. Receivable debts

1. Equitized enterprises shall be responsible for comparing, certifying and recovering receivable debts, which become mature before the time of equitization. By the time of valuation of the enterprises, if there remain any bad debts, they shall be handled according to the State's current regulations on handling of outstanding debts.

2. By the time of making decision to publicize their value, the equitized enterprises shall have to hand over irrecoverable debts, which have been excluded from their value (enclosed with the related dossiers and documents) to the Enterprise Debt and Outstanding Asset Purchase and Sale Company for handling according to law provisions.

3. For amounts already prepaid to the goods suppliers and)or service providers, such as house rents, land rents, goods purchase money and remunerations, they shall be verified and included in the value of the equitized enterprises.

Article 12. Payable debts

1. Enterprises must mobilize various sources for paying debts, which become mature before the time of equitization or reach agreement with the creditors to handle or convert them into contributed share capital.

The conversion of debts into contributed share capital shall be determined based on the results of share auctions or on the agreement between the enterprises and the creditors to determine the auction bids.

2. In the course of equitization, if enterprises have difficulties in repaying overdue debts for reason of business losses, such debts shall be handled according to the State's current regulations on handling of outstanding debts.

Article 13. Reserves, losses or profits

1. The reserves for stock price decreases, bad debts, securities price decreases, and exchange rate differences shall be accounted into business results of the enterprises.

2. The job-loss allowance reserve shall be used by enterprises for providing allowances to laborers left redundant in the course of equitization; if there remains any amount, it shall be accounted into business results of the enterprises.

3. The risk reserve and professional reserve funds of the banking and insurance systems and financial institutions shall be transferred to the joint-stock companies for continued management.

4. The financial reserve fund shall be used for offsetting losses (if any), property losses, irrecoverable debts; any remaining amount shall be included in the value of State budget capital portions at the equitized enterprises.

5. Arising profits shall be used for offsetting the previous year's losses (if any), losses being assets no longer needed or awaiting liquidation, asset price decreases, irrecoverable debts; any remaining amount shall be distributed according to current regulations before valuing the equitized enterprises.

6. For losses accrued by the time the equitized enterprises are transformed into joint-stock companies, the enterprises shall offset them with the financial reserve fund and pre-tax profits earned by the time of equitization. In case of shortage, they shall apply measures to write off debts owing to the State budget, banks and)or the Development Assistance Fund according to the State's current regulations on handling of outstanding debts.

If the enterprises still suffer from losses though having taken the above-said measures, they may offset such losses with their State capital amounts.

Article 14. Longer-term investment capital in other enterprises, such as capital contributed to joint ventures or business cooperation, contributed as shares, contributed for the formation of limited liability companies, and other forms of longer-term investment

1. Where the equitized enterprises inherit long-term investment capital invested by the State-owned companies in other enterprises, all of these capital amount shall be included in the enterprise value for equitization according to the principles set forth in Article 20 of this Decree.

2. Where the equitized enterprises do not inherit long-term investments in other enterprises, they shall report such to the competent bodies for handling as follows:

a) Reaching agreement to sell such investments to the involved partners or other investors;

b) Transferring them to other enterprises acting as new partners.

Article 15. Cash balances of reward and welfare funds

The cash balances of reward and welfare funds shall be divided to laborers currently working at the enterprises for purchasing shares. Laborers shall not have to pay income tax on this income.

Chapter III

VALUATION OF EQUITIZED ENTERPRISES

Section I. METHODS OF VALUING ENTERPRISES

Article 16. When undertaking equitization, State-owned companies may apply one of the following enterprise-valuing methods:

1. Asset method.

2. Discount cash flow method.

3. Other methods.

The Finance Ministry shall guide the valuation of equitized enterprises by the above-said methods.

Section 2

ENTERPRISE VALUATION BY THE ASSET METHOD

Article 17. Value of equitized enterprises by the asset method

1. The actual value of an equitized enterprise is the value of all existing assets of the enterprise at the time of equitization, taking into account the enterprise's profitability which is accepted by both share purchasers and sellers.

The actual value of an enterprise's State capital is the enterprise's actual value after subtracting payable debts, the reward fund and welfare fund balances and the non-business budget balance (if any).

In case of equitization of the whole corporations invested and established under the State’s decisions, the values of the State capital amounts of the whole corporations for equitization shall be the actual values of the State capital amounts of the corporations' offices, member companies and non-business units (if any).

In case of equitization of the whole corporations invested and established by the companies themselves, the values of State capital amounts for equitization shall be the actual values of the State capital amounts at the parent companies.

2. The following amounts shall not be included in the enterprise value for equitization

a) The value of assets prescribed in Clauses 1, 2 and 3 of Article 10 of this Decree;

b) Receivable debts which are irrecoverable;

c) Incomplete capital construction expenses of works which are cancelled or postponed before the time of valuation of the enterprises;

d) Long-term investments in other enterprises, prescribed at Item b, Clause 2, Article 14 of this Decree.

Article 18. Bases for determination of the enterprises' actual value

1. Figures in the enterprises' accounting books at the time of equitization.

2. Documents on the inventory, classification and quality assessment of the enterprises' assets at the time of equitization.

3. Market prices of assets at the time of equitization.

Article 19. Value of land use rights and value of business advantages of enterprises

1. For land areas which the equitized enterprises are using as grounds for construction of working offices and transaction offices; construction of production and business establishments; land for agricultural production, forestry, aquaculture or salt making (including land assigned by the State with or without collection of land use levies), the equitized enterprises may opt for the form of land lease or land assignment according to the provisions of the Land Law.

a) If the equitized enterprises choose the land lease form, the land use right value shall not be included in the value of such equitized enterprises.

b) If the equitized enterprises choose the land assignment form, the land use right value must be included in the value of such equitized enterprises. The land use right value included in the equitized enterprise value is the price set by the provincial)municipal People's Committees, which is close to the market land use right transfer price and publicized on January 1 every year according to the Government's regulations. The order and procedure for land assignment, land use levy payment and grant of land use right certificates shall comply with current law provisions on land.

2. For land areas already assigned by the State to the enterprises for construction of houses for sale or lease; for construction of infrastructures for transfer or lease, the land use right value must be included in the value of the equitized enterprises. The land use right value included in the equitized enterprise value shall comply with the provisions of Item b, Clause 1 of this Article.

3. Business advantages of an enterprise include its geographical location, brand value and development potential.

The value of business advantages of an enterprise shall be determined on the basis of the ratio of after-tax profits to the State capital value of the enterprise before the time of equitization and the prepaid interest rate of long-term Government bonds at the time immediately before the time of enterprise valuation.

Article 20. Valuation of long-term investment capital of equitized enterprises in other enterprises

1. The value of State-owned companies' long-term investment capital in other enterprises shall be determined on the basis of:

a) The value of owner's capital reflected on the audited financial statements of the enterprises in which the State-owned companies have invested their capital;

b) The pre-equitization investment capital rates of the State-owned companies in other enterprises;

c) Where a State-owned company has invested foreign-currency capital, when being valued, such capital shall be converted into Vietnam dong at the average transaction exchange rate on the inter-bank foreign-currency market publicized by the State Bank of Vietnam at the time of valuation.

2. In cases where the long-term investment capital value of a State-owned company is determined to be lower than the accounting book value, the accounting book value of the State-owned company shall be used as the basis for valuation of the equitized enterprise.

3. The value of capital contributed by a State-owned company to a joint-stock company already listed on the securities market shall be determined on the basis of the price of shares traded on the securities market at the time of enterprise valuation.

Section 3

ENTERPRISE VALUATION BY THE DISCOUNT CASH FLOW METHOD

Article 21. Enterprise value determined by the discount cash flow method

1. The actual value of the State capital amount at an equitized enterprise shall be determined by the discount cash flow method based on the future profitability of the enterprise.

Where the enterprise value of the whole of a State corporation is determined by this method, the profitability of the State corporation shall be determined on the basis of the State corporation's profit according to the provisions of the financial regulations of State-owned companies.

Where a State-owned company invests capital in another enterprise, the value of the equitized enterprise shall be determined on the basis of profits brought about by such investment.

2. The actual value of an enterprise consists of the actual value of the State capital amount, payable debts, cash balances of the reward and welfare funds, and the non-business fund balance (if any).

Where an enterprise chooses the land assignment form, the land use right value must be also included in the value of the equitized enterprise according to the provisions of Clause 1, Article 19 of this Decree.

Article 22. Valuation bases

1. The enterprises' financial statements of the last five years preceding the time of enterprise valuation.

2. The enterprises' production and business plans of between 3 and 5 years after the enterprises are transformed into joint-stock companies.

3. The interest rates of long-term Government bonds at the closest time before the time of enterprise valuation and the discount cash flow co-efficient of the valued enterprise.

Section 4

ORGANIZATION OF ENTERPRISE VALUATION

Article 23. Mode of organization of valuation of equitized enterprises

1. For equitized enterprises having a total book value of assets of VND 30 billion or more, the valuation thereof shall be conducted through organizations with valuation functions, such as audit companies, securities companies, price expertise organizations, domestic and foreign investment banks with valuation ability (hereinafter referred to as valuation organizations for short).

The agencies competent to decide on the value of equitized enterprises shall select valuation organizations on the list publicized by the Finance Ministry.

In case of selection of foreign valuation organizations not yet operating in Vietnam, the approval by the Finance Ministry is required.

Valuation organizations, when valuing enterprises, must observe the current regulations and complete the valuation within the time limits set in the signed contracts; must be accountable for the accuracy and legality of the valuation results.

2. For equitized enterprises having a total book value of assets of under VND 30 billion, it is not necessary to hire valuation organizations to value the enterprises. In case of not hiring a valuation organization, the enterprises shall determine their values by themselves and report them to the agencies competent to decide on the enterprise values.

3. Enterprise valuation dossiers must be sent to the Finance Ministry and the agencies competent to decide on the enterprise values. The agencies competent to decide on the enterprise values shall verify before deciding on and publicizing the values of the equitized enterprises.

Article 24. Use of enterprise valuation results

The results of enterprise valuation conducted under the provisions of this Decree shall serve as the basis for determining the charter capital size, the structure of shares for first-time issuance and the reserve price for the auction of shares.

Article 25. Adjustment of values of equitized enterprises

By the time the enterprises are officially transformed into joint-stock companies, the agencies competent to decide on the enterprise values shall have to examine and handle financial matters arising from the time of valuation to the time the joint-stock companies are granted the business registration certificates in order to re-determine the State capital portion values.

The difference between the actual State capital portion value at the time the enterprises are transformed into joint-stock companies and the actual State capital portion value at the time of enterprise valuation shall be handled as follows:

1. In case of positive differences:

a) They shall be remitted to the State corporations or State-owned independent companies when State corporations' member enterprises or sections of State-owned independent companies are equitized and shall be used according to the provisions of Article 35 of this Decree;

b) They shall be remitted into the enterprise reorganization support fund at the Finance Ministry when the whole State-owned independent companies or State corporations are equitized and shall be used according to the provisions of Article 35 of this Decree.

2. In case of negative differences, the enterprises shall have to report them to the agencies competent to decide on equitization so that the latter can conduct examinations to clearly identify the causes and the responsibility for material compensation (if due to subjective causes); the remaining negative differences shall be handled as follows:

a) They shall be offset with the revenues earned from the equitization (including also the differences of the selling prices of shares).

b) If it is still insufficient, the State capital contributed to the enterprises and the plans on the sale of preferential shares to laborers in the enterprises shall be adjusted down and the joint-stock companies' charter capital sizes and structures shall be adjusted simultaneously.

c) After being handled according to the provisions of Items a and b, Clause 2 of this Article, if the negative differences are still not fully offset, then:

- The equitization-deciding agencies shall consider and decide to shift to the form of enterprise sale or bankruptcy (for cases where business registration has not yet been made according to the Enterprise Law).

- The Managing Boards shall convene the extraordinary shareholders' general assemblies (for cases where business registration has been made according to the Enterprise Law) to vote for one of the following options:

+ Accepting to inherit the remaining losses for continued operation.

+ Selling the enterprises on conditions that the purchasers inherit debts and losses.

+ Declaring bankruptcy and selling assets for debt payment.

- In case of shifting to the form of sale or bankruptcy, the enterprises shall have to coordinate with the concerned agencies in returning to the investors the share purchase amounts before paying debts to other creditors.

Chapter IV

SALE OF SHARES AND MANAGEMENT AND USE OF PROCEEDS FROM THE SALE OF STATE CAPITAL AMOUNTS AT ENTERPRISES

Section 1

FIRST-TIME SALE OF SHARES

Article 26. First-time purchasers of shares

1. Laborers of the enterprises.

2. Strategic investors being domestic investors, such as producers that regularly supply raw materials for the enterprises; persons that have committed to consuming the enterprises' products for a long time; persons with associated longer-term strategic business interests, with financial potentials and managerial capabilities.

When drawing up the equitization plans, the to be-equitized enterprises shall select strategic investors and submit the list thereof to the equitization-deciding agencies for approval.

3. Other investors (including also foreign investors).

Article 27. Structure of first-time shares

1. Shares to be held by the State.

2. Laborers of the enterprises may purchase preferential shares according to the provisions of Article 37 of this Decree.

3. Strategic investors may purchase no more than 20% of the quantities of shares sold out at preferential prices. The quantities of shares sold to each strategic investor shall comply with the equitization plans approved by the competent bodies.

4. Shares publicly auctioned to investors must not be lower than 20% of the charter capital (including also shares purchased in addition to the preferential shares of strategic investors and laborers of the enterprises).

Article 28. First-time selling prices of shares

1. The selling prices of preferential shares applicable to laborers of the enterprises shall be 40% lower than the average bid.

2. The selling prices of preferential shares applicable to strategic investors shall be 20% lower than the average bid.

3. Selling prices applicable to the subjects defined in Clause 4, Article 27 of this Decree shall be the successful bid of each investor.

Article 29. Preferential value for strategic investors and laborers in equitized enterprises

The total preferential value for laborers of the equitized enterprises and strategic investors shall be taken from the source of revenues additionally earned from the share auctions; if insufficient, it may be subtracted from the State capital amounts at the equitized enterprises but must not exceed the State capital amounts at the enterprises after subtracting the value of the State-held shares and equitization expenses.

Article 30. Mode of organization of first-time auctions of shares

1. Auctions directly held at the enterprises, for equitized enterprises having shares on sale valued at VND 1 billion or less (share auctions are organized by the enterprises themselves).

2. Auctions held at intermediary financial institutions, for equitized enterprises having shares on sale valued at over VND 1 billion.

Where an equitized enterprise has shares on sale valued at over VND 10 billion, it shall hold share auctions at a securities trading center in order to attract investors.

The agencies deciding on equitization of State-owned companies shall select and hire auction organizations.

3. Where enterprises are located in deep-lying areas where exist no intermediary financial institutions to hold auctions, the equitization-deciding agencies shall reach agreement with the Finance Ministry on the selling modes.

Article 31. Sequence of organization of first-time auctions of shares

1. At least 20 days before the time of auction, the auction agencies (enterprises, intermediary financial institutions, securities trading centers) must make public notices at the enterprises, the auction venues and on the mass media on the auction time, venue and form, participation conditions, quantity of shares expected to be sold, and other matters related to the share auction.

2. Holding the auction for other investors in the forms prescribed in Article 30 of this Decree.

3. Determining the average bids for calculating the preferential prices applicable to strategic investors and laborers.

4. Organizing the distribution and sale of shares to each strategic investor and labor of the enterprises.

5. Within 4 months after the date of issuance of the decisions approving the equitization plans, the enterprises must complete the sale of shares. Where there remain shares unsold, the enterprises shall report such to the agencies with equitization-deciding competence in order to adjust the charter capital sizes or structures in the plans on equitization and transformation of State-owned companies into joint-stock companies.

Article 32. Business registration of joint-stock companies

After completing the sale of shares and organizing the shareholders' general assemblies strictly according to the provisions of the Enterprise Law, the equitized enterprises must make business registration according to the provisions of the Government's Decree No. 109/2004/ND-CP of April 2, 2004 on business registration.

Article 33. Information publicity and transparency, listing on the securities market

1. The joint-stock companies must make public financial reports to shareholders and management agencies strictly according to the provisions of the Enterprise Law and other law provisions.

2. The State shall adopt preferential policies towards equitized enterprises which are eligible for immediate listing on the securities market.

Article 34. Management of State capital amounts at joint-stock companies

1. The State capital amounts at joint-stock companies shall be managed according to law provisions on management of State capital amounts invested in other enterprises.

2. For equitized enterprises where the State does not hold dominant shares, basing themselves on the specific conditions, the agencies acting as representatives of the owners of the State capital amounts in the joint-stock companies shall be entitled to decide whether to continue selling the State-owned shares in the joint-stock companies according to the current law provisions and the joint-stock companies' charters.

Article 35. Management and use of proceeds from the equitization of State-owned companies

The money amounts collected by the State from the equitization of State-owned companies (including the proceeds from the sale of State capital amounts and positive differences earned from the auctions of additionally issued shares by the equitized enterprises), after subtracting the equitization expenses, shall be used for the following purposes:

1. Supporting the equitized enterprises to realize policies toward laborers at the time of equitization.

a) Supporting the enterprises to pay allowances to laborers who give up or lose their jobs when the State-owned companies are transformed into joint-stock companies;

b) Supporting the equitized enterprises to provide re-training for their laborers and arrange them new jobs in the joint-stock companies.

2. The remaining amounts shall be managed and used as follows:

a) In case of equitization of member enterprises of State corporations or sections of State-owned independent companies, the State corporations or State-owned independent companies may use them for business activities and supporting the equitized enterprises to further deal with redundant laborers according to the provisions of Clause 8, Article 36 of this Decree.

b) In case of equitization of the whole State-owned independent companies or the whole State corporations, the remaining amounts shall be transferred to the enterprise reorganization support fund of the Finance Ministry for investment in companies where the State needs to hold 100% of their capital but lacks capital, joint-stock companies where the State holds dominant shares but the State capital amounts available in the equitized enterprises are not enough to ensure the quantities of State-held shares, and for supporting the equitized enterprises to further deal with redundant laborers according to the provisions of Clause 8, Article 36 of this Decree. The rest shall be invested in enterprises through the State Capital Investment and Business Corporation.

Chapter V

POST-EQUITIZATION POLICIES TOWARD ENTERPRISES AND LABORERS

Article 36. After being equitized, enterprises shall enjoy the following preferences:

1. To enjoy preferences like newly established enterprises according to law provisions on investment promotion without having to carry out the procedures for the grant of investment preference certificates.

Where the equitized enterprises are listed on the securities market, besides the above-said preferences, they also enjoy preferences according to law provisions on securities and securities market.

2. To be exempt from registration fees for the turning of assets under the equitized enterprises' management and use into those owned by the joint-stock companies.

3. To be exempt from the fee for the grant of business registration certificates when State-owned companies are transformed into joint-stock companies.

4. To maintain the contracts on lease of buildings and architectural objects of State agencies or to have the pre-emptive rights to purchase them at the market prices at the time of equitization for stabilizing production and business activities.

5. To enjoy the land use rights under the provisions of the Land Law in cases where the values of the equitized enterprises are inclusive of the land use right value.

6. To continue borrowing capital from commercial banks, financial companies and other credit institutions of the State according to the mechanism applicable to State-owned companies.

7. To maintain and develop welfare funds in kind, such as cultural facilities, clubs, health stations, sanatoria and nurseries, to ensure welfare for laborers of joint-stock companies. These assets shall be placed under the laborers' collective ownership and the joint-stock companies' management.

8. After the State-owned companies are transformed into joint-stock companies, if laborers from the State-owned companies lose or give up their jobs, including those voluntarily giving up their jobs, for reason of reorganization of business activities and)or technology renewal, this matter shall be settled as follows:

a) Within 12 months as from the date the joint-stock companies are granted the business registration certificates, if laborers lose their jobs due to company restructuring and are entitled to enjoy the policies towards laborers left redundant due to State enterprise reorganization under the Government's Decree No. 41)2002)ND-CP of April 11, 2002, they shall be provided with supports from the Redundant Labor Support Fund.

Other laborers who lose or give up their jobs shall enjoy job-loss or job severance allowances according to the current labor legislation provisions and supports from the money amounts collected by the State from the equitization of State-owned companies as prescribed in Article 35 of this Decree.

b) Where laborers lose or give up their jobs during the four subsequent years, the joint-stock companies shall have to pay them 50% of the total allowance prescribed in the Labor Code while the rest shall be paid from the money amounts collected by the State from the equitization of State-owned companies as prescribed in Article 35 of this Decree. Past this time limit, the joint-stock companies shall have to pay whole allowances to laborers.

Article 37. Laborers of equitized enterprises shall enjoy the following preferential policies:

1. Laborers on the list of regular labors of the enterprises at the time of decision on equitization may purchase a maximum of 100 shares for each year of working in the State sector at a price 40% lower than the average bid at which shares are sold to other investors.

2. To continue participating in social insurance and enjoying social insurance interests according to current regulations if laborers shift to work for the joint-stock companies.

3. To enjoy the pension regime and interests according to current regulations if they are eligible therefor at the time of equitization.

4. If losing or giving up their jobs at the time of equitization, laborers shall be paid with job loss or job severance allowances according to law provisions.

Chapter VI

RIGHTS AND OBLIGATIONS OF SHAREHOLDERS

Article 38. Strategic shareholders shall have the following rights and obligations:

1. Interests:

a) To purchase preferential shares under the provisions of Clause 3, Article 27 and Clause 2, Article 28 of this Decree;

b) To be entitled to participate in managing the joint-stock companies according to law provisions and the joint-stock companies' charters;

c) To pledge or mortgage their shares in credit relations in Vietnam;

d) To enjoy other interests according to law provisions and the joint-stock companies' charters.

2. Obligations:

a) To fulfill their commitments when purchasing shares;

b) To refrain from transferring preferential shares they have purchased under the provisions of Clause 3, Article 27 of this Decree within 3 years as from the date the joint-stock companies are granted the business registration certificates. In special cases where they need to transfer these shares within this time limit, they must obtain the consent of the joint-stock companies' Managing Boards;

c) Other obligations prescribed by law and the joint-stock companies' charters.

Article 39. Rights and obligations of other shareholders

Other shareholders shall have the interests and obligations prescribed in the Enterprise Law and the joint-stock companies' charters.

Particularly for foreign shareholders, they may convert dividends and money amounts earned from the transfer of their shares in Vietnam into foreign currencies for overseas remittance after fulfilling all tax obligations prescribed by law. If they reinvest their earned dividends in Vietnam, they shall enjoy preferences under the provisions of the Law on Domestic Investment Promotion.

Chapter VII

ORGANIZATION OF IMPLEMENTATION

Article 40. Powers and responsibilities of the ministries, provincial)municipal People’s Committees and Managing Boards of State corporations

1. The ministers, the heads of the ministerial-level agencies or Government-attached agencies, the presidents of the provincial)municipal People's Committees shall base themselves on the State enterprise reorganization plans already approved by the Prime Minister:

a) To organize the valuation of State corporations to be equitized, send the valuation results to the Finance Ministry for verification and decision on the publicization thereof;

b) To submit to the Prime Minister for approval the plans on equitization of the whole State corporations;

c) To decide to equitize enterprises under their respective management; decide to value enterprises; approve the equitization plans to transform State-owned companies into joint-stock companies;

d) To review and take initiative in applying other forms, such as enterprise assignment, sale or bankruptcy, to enterprises which are on the list of to be-equitized enterprises but have no more State capital;

e) To settle problems faced by equitized enterprises according to their assigned competence within 15 days after receiving the complete dossiers. To promptly report any problems falling beyond their competence to the Prime Minister for consideration and decision;

f) To send decisions publicizing the enterprise valuation results, decisions approving the plans on equitization of State-owned companies and documents on equitization to the Enterprise Renewal and Development Steering Committee under the Finance Ministry for monitoring, synthesis and reporting to the Prime Minister.

In case of failure to implement the approved plans, the heads of the enterprise management agencies shall be subject to disciplinary forms according to current regulations.

2. The Managing Boards of State corporations have the responsibilities:

a) To organize the arrangement of enterprises attached to their State corporations according to the State enterprise reorganization schemes already approved by the Prime Minister;

b) To direct the member companies to handle financial matters according to the provisions of Chapter II of this Decree, organize the valuation of enterprises, draw up equitization plans and submit them to competent authorities for approval;

c) To handle financial problems faced by equitized enterprises according to their competence.

In case of failure to implement the approved plans, the Managing Boards of State corporations shall be subject to disciplinary forms according to current regulations.

3. The Enterprise Renewal and Development Steering Committee under the Finance Ministry shall be responsible for assisting the Prime Minister in directing, examining, supervising and urging the ministries, provincial)municipal People's Committees and Managing Boards of State corporations in implementing the equitization work according to law provisions and the approved State enterprise reorganization plans.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 41. This Decree replaces the Government's Decree No. 64)2002)ND-CP of June 19, 2002 and takes effect 15 days after its publication in the Official Gazette. All earlier regulations on equitization contrary to this Decree shall cease to be effective.

The to be-equitized enterprises which have got the competent authorities' decisions approving the plans on transformation of State-owned companies into joint-stock companies before the effective date of this Decree shall not have to change the plans to comply with this Decree.

Article 42. The Finance Ministry, the Labor, War Invalids and Social Affairs Ministry, Vietnam State Bank, the Natural Resources and Environment Ministry, other concerned ministries and agencies shall have to guide the implementation of this Decree.

Article 43. The ministers, the heads of the ministerial-level agencies or Government-attached agencies, the presidents of the provincial)municipal People's Committees, the Managing Boards of State corporations established under decisions of the Prime Minister shall have to implement this Decree.